The Oregon Division of Financial Regulation (DFR) is warning people to be wary of an unexpected text or direct message from a stranger – it might be the first step in a relationship investment scam, also known as a romance scam or “pig butchering.” These scams often involve fraudsters contacting targets seemingly at random, using social media or common communication apps.

The scammer gains the target’s trust, often by starting a romantic relationship or a friendship. The scammer then starts to convince the victim to invest in phony investments, including fraudulent cryptocurrency schemes, before falsely claiming the initial investment grew significantly. The scammer then asks for more money and demands payment of fees or taxes if the victim requests to withdraw the funds. Even when the victim pays the withdrawal fees, the fraudster does not refund the victim's money, but rather disappears with the funds without any further communication.

According to the Financial Industry Regulatory Authority (FINRA), there are several warning signs to be aware of involving these types of scams:

Unexpected contact: Never respond to unsolicited messages from unknown contacts, even about seemingly benign topics, especially through text message or on encrypted messaging applications like WhatsApp or Telegram.
Refusal to participate in video chats:If someone you have been messaging declines to interact face-to-face, they likely are not the person from the profile photo.
Request for financial information: Don't share any personal financial information with anyone you have never met in person. If a new virtual friend or romantic connection starts making financial inquiries, put the brakes on the relationship.
Invitation to invest in specific financial products:Be wary of any unsolicited investment advice or tips, particularly from someone you have spoken to only online, even if they suggest you trade through your own account. Always question what a source has to gain from sharing tips with you and whether the transaction fits with your financial goals and investment strategy.
Unknown or confusing investment opportunity:Carefully evaluate the product, as well as the person or company requesting your investment. Along with a basic search, try adding words such as “scam" or “fraud" to see what results come up. Consider running recommendations by a third party or an investment professional who has no stake in the investment and use FINRA BrokerCheck to see if the promoter is a registered investment professional.
Unfamiliar trading platforms:Do extensive research before moving any money, particularly in an emerging market such as cryptocurrency, which has hundreds of exchanges and new avenues for trading that continue to evolve. Who controls the platform? What security measures are in place? How can you withdraw funds if needed? If you don't know the answers to those questions, do not put your assets there.
Exaggerated claims and elevated emotions:Take a closer look at any investment that offers much higher than average returns or is touted as “guaranteed.” Fraudsters will also often use their knowledge about you to appeal to your emotions – for example, “Don't you want to have money to send your kids to college?”
Sense of urgency about an upcoming news announcement or share price increase:Remember that insider trading is illegal. You should never trade in shares of a company on the basis of material, nonpublic information.

“Romance and crypto scams continue to be the source of significant losses for consumers,” said TK Keen, DFR administrator. “Consumers who receive contacts out of the blue through messaging apps on their phone or other means should be especially suspicious of those trying to entice them into cryptocurrency or any other investments.”

Several states and federal authorities have issued warnings about this type of fraud. In 2023, investment fraud caused the highest losses of any scam reported by the public to the FBI's Internet Crimes Complaint Center (IC3), totaling $4.57 billion, a 38 percent increase from 2022. Frauds involving cryptocurrency, including relationship investment scams, increased from $2.57 million in 2022 to $3.96 billion in 2023, a 53 percent rise. DFR accepts consumer complaints relating to investment fraud and will forward other scam complaints to the appropriate law enforcement authorities. Consumers should also report scams to the FBI's IC3 at https://www.ic3.gov/. Learn more about relationship investment scams and how to outsmart scammers by visiting DFR’s website.

Anyone who thinks they may have been a victim of a relationship investment scam can fill out our online complaint form or contact DFR’s consumer advocates at 1-888-877-4894 (toll-free) or email dfr.financialserviceshelp@dcbs.oregon.gov.

Source: Oregon Division of Financial Regulation

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